Get together with a group of academics and the talk will quickly turn to the dismal job market.
I ran into my old babysitter in the city over the weekend. Her husband has a PhD in anthropology from an Ivy League and a book, but he's still doesn't have a tenure track job. He's got a lousy post-doc that pays around $30,000 per year.
At a party a couple of weeks ago, one woman told me that there were five political theory jobs in the entire country. Colleges just aren't hiring.
Despite Obama's talk about the importance of community colleges, the community college system has had to slash their programs due to budget cuts.
Dean Dad writes that while we make drastic cuts to our system of higher education, the Asian countries are putting more money into their system. How will we compete with these nations if our colleges are squeezed, our manufacturing system are not modernized, and our health care costs crush us? Where is our comparative advantage?
Apt. 11d 
The Gates Foundation has been locked in on this for years. (They should be – Microsoft has had trouble hiring good engineers for, like, two decades now. There just aren’t enough in the States.)
I wonder, do other countries experience the same level of tension between business and academic communities that we have? In the States it seems neither has much respect for the other. That dynamic can’t help.
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This actually feeds into my growing sense that only two issues matter in American politics: Entitlements and Abortion. Everything else is either subsidiary or closely related to these. Because in the long term, only by controlling entitlement growth will there be money for education.
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Hey MH, what about military spend? How do you feel about the costs of the wars in Iraq & Afghanistan and their impact on education budgets?
Don’t get me wrong, I’m the first one to go off about the broken health care system and the evil fee-for-service model. But you can’t ignore foreign policy and its costs.
According to the numbers I’ve found, for 2008 the federal budget broke down as follows:
ENTITLEMENTS: 44%
Medicare & Medicaid 23%
Social security 21%
MILITARY: 21%
OTHER:
Interest on federal debt 8%
Other mandatory payments 10%
“Discretionary” 17%
I can’t quite tell if that even includes all the war expense; I remember that was an issue with the Bush administration’s bookkeeping, and these numbers are from a budget submitted by Bush.
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Jen, that actually is my point. You start off with 44% on entitlements, you will have trouble maintaining military spending when those entitlements grow (as pretty much everybody assumes they will). The monetary cost (as a percentage of GDP) of the current military, including Iraq and Afghanistan are low by Cold War standards. Without controlling entitlements, the U.S. will sooner or later lose its ability for military action excepting a direct threat to the U.S. I suppose some view that as a positive or neutral development, but it would be a fundamental shift in world order. So, I’m guessing that, for those people who are better informed about politics, views on whether entitlement reform is needed correlate strongly and positively with views as to whether a strong U.S. military is important for world peace. And, I expect to see the growth of a similar dynamic for people who support expanded spending in other areas, be it education or infrastructure or green energy or whatever.
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In the Bush years, a lot of Iraq and Afghanistan spending was run through supplemental budget bills, so it’s entirely possible that the war expenses are not included in those numbers.
It’s also worth remembering that US military spending is as much as every other major power on the face of the earth, combined.
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I just fundamentally disagree with MH’s stance that current US military spending levels are appropriate, or low by Cold War standards. That’s not a standard I want to live by.
Comparisons are difficult, but in the UK at least — a country that has deployed troops along with us in both wars — defense spending is 6%. “Social protection” (equivalent to Social Security?) clocks in at 28%, health expenses at 18%. Health care is more constrained in the UK for those who receive it, but they’re also covering *everyone*, not just ~30% of the population that we cover with medicare/medicaid. So no matter how you slice it health care is going to be a big spend. Not so with defense – there is great variance in levels of defense spending, and as a country we are off the charts.
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“The monetary cost (as a percentage of GDP) of the current military, including Iraq and Afghanistan are low by Cold War standards.”
In support of that, I remember hearing recently that JFK wanted to spend half of the federal budget on military spending.
I found it (this is an interview dated from 1960 where JFK is trying to out-hawk Nixon). Note that the pre-JFK status quo is spending half of the budget on defense:
http://www.jfklink.com/speeches/joint/app44_forces.html
” QUESTION. Half of the national budget is now earmarked for defense. Do you feel this is the right percentage?
KENNEDY. There is-unfortunately-no inexpensive way to keep America strong.
Whatever is needed will be spent to develop a retaliatory power sufficient to deter aggression.”
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Jen,
Using the most authoritative source on military expenditures that I could find in 30 seconds(http://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures ), I see that in 2005, the U.S. spent 4.06% of GDP on its military compared to 2.4% in the U.K.
Then look at the following site and tell me how much time 1.7% of GPD (or even 4%) will buy you if entitlement spending growth does not stop.
Click to access 03-08-Long-Term%20Spending.pdf
There is going to be a giant entitlement fight at some point. Trying to cut other things is like some poor Californian with a mortgage that takes 70% of their take-home pay switching to generic Cheerios to keep the house.
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Just to remind — there is a big difference between the budget and the GDP. GDP in the U.S. captures private and public economic behavior whereas the budget is clearly only public spending.
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MH, just to be clear, you’re talking about reining in public spending on health care, right? Because a lot of times in public discourse the phrase “entitlement reform” has been a Republican smoke screen for “privatizing Social Security.” And that’s another matter entirely.
I’m not at all sure that public spending on health care is growing at a different rate from overall spending on health care. (Anybody have a pointer to good figures?) So the answer to the “giant entitlement fight” looks to me like comprehensive health care reform.
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I’m getting 2% for health care growth in general and 2.1% for medicare:
http://gateway.nlm.nih.gov/MeetingAbstracts/ma?f=103623067.html
http://content.healthaffairs.org/cgi/content/abstract/26/1/154
But, I’m not sure I’m reading the definitions right in the medicare summary (is “excess growth” what I’d call inflation, or does it mean something different?)
I do think that in both health care & the military there’s an argument that we are funding benefits for other countries that keep their rates lower (i.e. drug development + keeping the free world safe). But, I think that we also suck public money into private profit in health care, and funnel “entitlement” money through the military, in the form of pet projects, and use the military for misguided and expensive projects, both warlike and not.
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“I’m not at all sure that public spending on health care is growing at a different rate from overall spending on health care.”
Even if it’s not now, with an aging population becoming eligible for Medicare, the public rate will inevitably start growing much faster than the private rate. In a couple of years, for instance, my Boomer parents are going to go from paying all of their medical expenses themselves in cash to being Medicare-eligible. Their medical expenses are going to suddenly flip from being a private expense to a public expense.
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Entitlements comprise something like 55% of the country’s budget. (see this handy wikipedia chart. Entitlements include medicare, medicade, and social security. They do cost more than Defense. Add on interest payments and the US really only has about 15% of the total pot to play around with.
One of the goals of Obama’s health care plan is to reign in the costs of medicare/medicaid. Not only it will it extend care to those who aren’t eligible right now, but it will have more control over the expenses that it is already making.
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MH, just to be clear, you’re talking about reining in public spending on health care, right?
That, and means-testing entitlements.
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“Add on interest payments and the US really only has about 15% of the total pot to play around with.”
Eek! This sounds exactly like MH’s case of the strapped California homeowner.
“One of the goals of Obama’s health care plan is to reign in the costs of medicare/medicaid. Not only it will it extend care to those who aren’t eligible right now, but it will have more control over the expenses that it is already making.”
If it works exactly as planned.
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I actually agree with MH when it comes to health care expense. With the trajectory we’re currently on, we spend a greater percentage of our budget covering just 30% of the population than many countries do to cover everyone. If we continue with this pattern, but with universal coverage, we’ll be bankrupt almost immediately. (Medicare is already slated for bankruptcy 9 years out as it is.)
And just to be clear, the private sector is also being bankrupted by health care spends — witness General Motors. So it’s not specific to public spending.
Sadly, the health care reform proposals that are currently on the table do not get specific as to how they will rein in spending (either public or private). No one is touching the fee-for-service model which IMHO is the heart of the problem.
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p.s. I still don’t see why defense gets a free pass to keep budget high.
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p.s. I still don’t see why defense gets a free pass to keep budget high.
Foreigners are shifty.
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“p.s. I still don’t see why defense gets a free pass to keep budget high.”
Just think of it as stimulus spending.
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I’m sure that’ll make me feel much better when the news comes down about the next teacher layoff.
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My school district spends $20k per kid per year to get a 33% drop-out rate. (I’d like to point out that this is a relatively poor area with an average household income of about $50k.) Plus, we’ll have to bail-out their pension fund. Plus, to avoid any lay-offs in the face of drastically dropping enrollment, they’ve sopped-up most of the big charity money in a (so far failing) attempt bribe parents by offering money for college, but only if your kid is in the system for 12 years.
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I guess what I’m saying is that if your school district’s biggest problem is “not enough money”, you are probably in relatively good shape.
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Remember the question that started this post: why is the US disinvesting in education and thus falling behind so many other countries? MH’s thesis was, it’s because of expensive entitlements. I am arguing that, as almost every developed country pays entitlements, it’s about making those entitlements efficient and reducing military spending.
This is way, way beyond Pittsburgh’s dropout rate. No one’s even thinking about how we’re supposed to pay for all this military once our economic power is destroyed. And ignoring education is destroying our ability to compete economically.
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I’m of the persuasion that the biggest problem with education is the teachers’ union.
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Jen,
The nice thing about military spending is that it can be pared down pretty rapidly, as it was during the 90s. These entitlements, though, are a completely different beast. Once the citizenry is used to a certain entitlement, they become very attached to it, very defensive about any changes to it.
With regard to your concerns about education, I have at least a few issues:
1. Illinois is not exactly a byword for efficiency and incorruptibility. If you have a good look in the sofa cushions of your state budget, you might find enough to manage. Scarcity can be helpful in that it can help us figure out what our priorities are, as well as identify unproductive money-eaters. On the individual level, we ask do we really need that many minutes on our cell plan? Can we cut back our landline to the absolute minimum (so that it works in case of emergency)? How often do we need to water the lawn? Do we need all these magazine subscriptions? Why don’t we just stay home and have sandwiches rather than go out to dinner when we’re tired? There are lots of things that individuals can do to save money that don’t impact quality of life that much, and I think both schools and the military should both do that. Remember that the US spends a whole lot more on education than practically any other nation on earth, just as we do on health and defense.
2. Don’t forget what we’re currently getting for our ed dollar: rapidly churning, expensive educational fads and the so-called “Crayola Curriculum.” We’re not going to beat China with more dioramas and celebrity costumes.
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re: US disinvesting in education. This is a federal v. state/local thing. The federal gov’t isn’t disinvesting in education to pay for health or for defense, because the feds have never covered much of the cost of education in this country. Only 10% of the total education ticket comes from the feds. It’s a state/local thing. The states are pulling out of higher education, because of economic hardships. Lower ed hasn’t really taken a hit yet, mostly because of union contracts. States, unlike the federal gov’t, aren’t allowed to run deficits, so this recent economic downturn has been devastating.
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“Foreigners are shifty.”
Did you really say that?
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I don’t think K-12 has been protected. It’s been protected a bit better than secondary education, but the union contracts only prevent some things not others. They’re still laying off teachers, not filling positions, and increasing class sizes, hiring fewer paraprofessionals, and keeping their fingers crossed that the system doesn’t fall apart.
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Did you really say that?
It isn’t on my business cards anymore.
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“Once the citizenry is used to a certain entitlement, they become very attached to it, very defensive about any changes to it.”
You say that like it’s a bad thing.
Another neat trick that recent years have brought at the national level is seriously tightened visa restrictions and border crossings that are nothing but hassle and security theater. The US is (used to be?) probably the biggest net winner from other countries’ brain drains. International conferences also think twice about US locations because of the perception of hassle. If we squander these advantages (if we haven’t already) they’ll be awfully hard to recapture.
I read that one of the key points of compromise in the stimulus was to cut back on aid to the states. That federal aid could have covered a bunch of shortfalls that are now leading to the kind of cutbacks that Laura is talking about. So no, the feds aren’t involved in education directly, but they could have helped out in a way that prevents a temporary problem from becoming a permanent one with knock-on effects. They may yet, if something like a second stimulus is enacted, but it sure would have been nice to get it right in the first place.
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that are nothing but hassle and security theater.
Unfortunately, you get that without crossing a border also.
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“I read that one of the key points of compromise in the stimulus was to cut back on aid to the states. That federal aid could have covered a bunch of shortfalls that are now leading to the kind of cutbacks that Laura is talking about.”
The shortfalls aren’t just going to be this year. They are going to be at least for the next 2-3 years. Propping up the states temporarily isn’t any more of a long-term solution than pumping billions into GM and Chrysler. Many states and locales (for instance Florida) created budgets that would only work with the most fevered pitch of housing construction. There’s not going to be a housing boom comparable to the one we just finished in the next 20 years, and maybe not even in our lifetimes. The states need to rethink their whole way of doing business and putting off the day of reckoning is not actually helpful. It’s time to move to a sustainable level of state spending rather than one artificially kept afloat with trillion dollars of borrowed federal money. Borrowing vast amounts of money for the public sector just reduces the pool of investment dollars available for restoring the vitality of the private sector and delays a true recovery.
“second stimulus”
They haven’t even finished spending the first one.
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Borrowing vast amounts of money for the public sector just reduces the pool of investment dollars available for restoring the vitality of the private sector and delays a true recovery.
And how exactly is the private sector supposed to remain vital when it can’t find qualified workers?
If we want to discuss the inappropriate ways in which education spending is funded, that’s also a valid discussion. Ditto the long conversation about how to make schools perform better. But at the root, this idea that education is not as worthy of funding as other stuff (like for example highway repairs, defense, or Olympic bids) is flawed. You don’t see anyone insisting that defense balance its budget every year, regardless of results.
I swear, sometimes I think education cuts of the 80s are already evident, in our inability to govern ourselves wisely.
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I’m sorry for my tone today — it’s not really appropriate. I should say something more like “It will be challenging for the private sector to remain vital and continue to fund our standard of living if we can’t find qualified workers.”
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“Ditto the long conversation about how to make schools perform better.”
As MH mentioned, his school district spends $20,000 a year per student to achieve a 33% dropout rate. Isn’t now a good time to figure out how to make that money work harder? If those public schools can’t achieve wonderful things with $20,000, it’s very unlikely that they will do better with $30,000. The schools (including many private schools) have made some very poor choices in curriculum and pedagogy over the past several decades. They need to demonstrate that they can be smart with the money. The good news for schools is that (given the difficulties in the private sector) there should be a lot of talent available cheap.
As I said earlier, I am more than willing to hear about wasteful military spending (unnecessary planes, unnecessary bases).
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“Education cuts of the 80s?” What are you talking about? Education spending increased pretty dramatically following the publication of “A Nation At Risk,” at both the federal and state levels.
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But jen is absolutely right that the private sector needs educated workers, and that the gov’t could be doing a whole lot better in that regard.
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“”Education cuts of the 80s?” What are you talking about? Education spending increased pretty dramatically following the publication of “A Nation At Risk,” at both the federal and state levels.”
I have to rush off, but now that Dr. Manhattan mentions this, wasn’t Bush famously lavish with federal education spending? I haven’t been able to track down more recent stuff, but as of 2003, there are a number of articles on huge increases in federal education spending. The consensus seems to be that between 2001 and 2003, federal education spending rose nearly 60%. This mythology of Republicans slashing education funding that really needs to be put to rest, especially after the Bush years.
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“Borrowing vast amounts of money for the public sector just reduces the pool of investment dollars available for restoring the vitality of the private sector and delays a true recovery.”
No, no, no, nononono. The whole point of doing a bunch of public-sector borrowing during a recession — following a panic, especially a financial panic — is that private demand has dropped significantly and that the fall is artificially low because of the panic. There’s no crowding out happening because either private sector borrowing has dropped precipitously or lending to the private sector has seized up (as happened in 2008 when banks had to tighten up on capital to make provision for expected losses).
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Education money from the feds dropped a bit after Reagan, but went up again. Here’s a chart. It increased at the state and local levels during the Reagan administration.
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— is that private demand has dropped significantly and that the fall is artificially low because of the panic.
Except what if the problem is private demand was artificially high before the panic? Banks had unexpected losses because they made loans nobody could pay back. I’m not worried about crowding out, I’m worried that’s we’ve replaced unsustainable private borrowing with unsustainable public borrowing in an attempt to pretend structural unemployment is really cyclical unemployment.
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Just to clarify, even though the federal contribution to education has increased, it is still a very small portion of the overall cost of educating kids. Federal money is only like 9% of the total with 50% coming from the state and 41% from local government. The cost of educating kids is increasing thanks to technology, increased detection of special needs, and other stuff. To really make a difference in test scores and in improving overall quality of education, the costs would have to triple. I’m up for it.
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re: historical funding cuts, if you look at the chart Laura references above (and mindful of the disclaimer about federal portions of education funding) it shows federal education funding dropping by more than 20% and not returning to 1979 levels until 1992.
I never claimed all Republicans cut education funding; I am only referencing what was happening in public schools when I was attending them in the early 80s.
BTW I do agree with MH that what we’re seeing now are corrections related to structural unemployment. Not everyone who was building houses or selling Prada bags 3 years ago will be returning to that line of work. It reminds me of the dot-com era in that way; lots of people were flushed out of the (bloated) tech industry following the collapse. It was a good thing for the market, although often wrenching for the individuals.
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“I’m worried that’s we’ve replaced unsustainable private borrowing with unsustainable public borrowing in an attempt to pretend structural unemployment is really cyclical unemployment.”
Amen. I’m not sure that the Obama administration quite gets this, but the problem is misallocation of resources (for instance to the housing and construction sectors), creating MH’s structural unemployment. To attempt to prop up the status quo with things like Cash for Clunkers and the $8,000 first-time homebuyer’s tax credit is only to delay the inevitable.
I suppose in the grand scheme of things, those are both budgetary small potatoes, but both programs demonstrate the fundamental unsoundness of the administration’s strategy. They’re small enough that we can figure out why they don’t work.
“The cost of educating kids is increasing thanks to technology…”
Shouldn’t it be the other way around? In any other area, technology makes things goods and services cheaper.
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Education is, by its very nature, experimental. We teachers are just as susceptible to snake-oil sales pitches, fads, and cultural pressures as any professionals. Check out http://penningtonpublishing.com/blog/reading/educational-fads-what-goes-around-comes-around/ for a list of educational fads over the last thirty years that will make you cringe, laugh, and add a bit of perspective. What goes around, comes around.
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